As prices rise, employers in Philippines budget ‘highest’ pay hike since pandemic
MANILA, Philippines — Filipino professionals are set to receive their highest pay raise since the pandemic fallout of 2020 as concerns surrounding pricier consumer goods and services and the war for talent rage in the local labor market.
Based on an April and May survey of 6,945 organizations in Asia Pacific, with 385 companies in the Philippines, global advisory and brokerage firm Willis Towers Watson (WTW) said companies are budgeting an average median salary increase of 5.7% next year. This was slightly higher than the 5.5% actual increase this year.
“This is the highest salary increase budgeted since the pandemic,” said WTW.
The survey indicated that 52.5% of employers in the country allocated larger salary increases this year compared to 2021.
WTW cited the top three reasons for companies allotting higher actual salary budgets for this year compared to their 2021, which range from concerns over a tight labor market, rising supply costs, and employees expecting higher increases due to accelerating inflation.
Inflation is projected to peak by October, according to the Bangko Sentral ng Pilipinas. This trend of expensive goods and services proved to be a sticky concern for employers in the Philippines as the pandemic wore on, as some businesses were not able to survive under a ‘high inflation’ environment.
“Compounding economic conditions and new ways of working are leading organizations to continually reassess their salary budgets to remain competitive,” said Patrick Marquina, Philippines leader of Work & Rewards for WTW.
Marquina noted that while they were expecting these salary increases, companies should need to show that they have a clear compensation strategy especially what factors that affect these budgeted increases.
Data broken down showed that fintech firms are set to pencil in the largest salary increases at 7.1% next year, while pharmaceutical and high tech companies landed in the lowest rung with a projected increase of 5.7% for next year.
Recruitment and retention problems
The survey also reported 86% of companies found it difficult to attract talent this year. Employee retention proved to be a sore spot for companies as well, with a whopping 84% reporting difficulties in this area.
To retain talent in the workplace, 52% of companies surveyed offered flexibility in remote work arrangements, while almost 40% adjusted their compensation schemes and 36% improved their employees’ experience.
The WTW survey reported that companies in the country drooled over IT skills despite finding it difficult to retain these skilled employees, as 64% of companies here wanted to add tech-savvy talent to their ranks in the next 12 months.
“With significant risks in the global economy, continued high inflation and employers grappling with talent supply challenges, organizations need to get more creative to address attraction and retention challenges,” Marquina said.